The Office of the Comptroller of the Currency (OCC) has confirmed that national banks may engage in riskless principal transactions for crypto-assets, extending a decades old securities market practice to digital assets. However, the 9 December interpretive letter leaves significant risks unaddressed, particularly around settlement finality, unregulated counterparties and cross border exposures.
In a riskless principal transaction, an intermediary purchases an asset from one party for immediate resale to another, with the first purchase conditioned on an offsetting order. The intermediary takes title momentarily but assumes minimal market risk because both legs execute “effectively simultaneously.”
The OCC states this structure makes banks the “legal and economic equivalent of a broker acting as agent,” despite technically trading as principal. For crypto-assets that qualify as securities, the authority was already clear under 12 U.S.C. § 24 (Seventh)1. The new letter extends this to crypto-assets that aren’t securities, analyzing them under the “business of banking” powers framework.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
